17 health systems zeroing in on exec teams, administration in 2023

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At least 17 health systems announced changes to executive ranks and administration teams in 2023. 

The changes come as hospitals continue to grapple with financial challenges, leading some organizations to cut jobs and implement other operational adjustments. 

The following changes were announced within the last two months and are summarized below, with links to more comprehensive coverage of the changes. 

1. Middletown, N.Y.-based Garnet Health laid off 49 employees, including 25 leaders, to offset recent operating losses. The reductions represent 1.13 percent of the organization’s total workforce and $13 million in salaries and benefits. 

2. Greensburg, Pa.-based Independence Health System laid off 53 employees and has cut 226 positions — including resignations, retirements and elimination of vacant positions — since January, The Butler Eagle reported June 28. The 226 reductions began at the executive level, with 13 manager positions terminated in March. 

3. Coral Gables-based Baptist Health South Florida is offering its executives at the director level and above a “one-time opportunity” to apply for voluntary separation, according to a June 29 Miami Herald report. Decisions on buyout applications will be made during the summer.

4. MultiCare Health System, a 12-hospital organization based in Tacoma, Wash., will lay off 229 employees, or about 1 percent of its 23,000 staff members, including about two dozen leaders, as part of cost-cutting efforts, the health system said June 29. The layoffs primarily affect support departments, such as marketing, IT and finance.

5. Seattle Children’s is eliminating 135 leader roles, citing financial challenges. The management restructuring and reduction affects 1.5 percent of employees across the organization.

6. Bonnie Panlasigui was tapped as the first president of Summa Health System Hospitals.This new role was first announced in October as the Akron, Ohio-based system made 10 changes to its executive team: reshuffling three leaders’ roles, adding three positions and eliminating four. 

7. Allentown, Pa.-based Lehigh Valley Health Network named two new regional and hospital presidents. Bob Begliomini, PharmD, was appointed president of Lehigh Valley Hospital-Cedar Crest campus in Allentown, according to a news release shared with Becker’s. He will also lead the health system’s Lehigh region, which includes four hospital campuses. Jim Miller, CRNA, was selected to replace Mr. Begliomini as president of the Muhlenberg hospital. He was also named  president of the health system’s Northampton region, which includes three hospitals, Muhlenberg being one of them. 

8. McLaren St. Luke’s Hospital in Maumee, Ohio, will lay off 743 workers, including 239 registered nurses, when it permanently closes this spring. Other affected roles include physical therapists, radiology technicians, respiratory therapists, pharmacists and pharmacy support staff, and nursing assistants. The hospital’s COO is also affected, and a spokesperson for McLaren Health Care told Becker’s other senior leadership roles are also affected.

9. Habersham Medical Center in Demorest, Ga., laid off four executives. The layoffs were part of cost-cutting measures before the hospital joined Gainesville-based Northeast Georgia Health System.

10. Grand Forks, N.D.-based Altru Health announced it would trim its executive team as its new hospital project moves forward. The health system is trimming its executive team from nine to six and incentivizing 34 other employees to take early retirement.

11. Scripps Health eliminated 70 administrative roles, according to WARN documents filed by the San Diego-based health system in March. The layoffs took effect May 8 and affect corporate positions in San Diego and La Jolla, Calif.

12. Columbia-based University of Missouri Health Care announced it would eliminate five hospital leadership positions across the organization. According to MU Health Care, the move is a result of restructuring “to better support patients and the future healthcare needs of Missourians.”

13. Winston-Salem, N.C.-based Novant Health laid off about 50 workers, including C-level executives, the health system confirmed to Becker’s March 29. The layoffs affected Jesse Cureton, the health system’s executive vice president and chief consumer officer since 2013; Angela Yochem, its executive vice president and chief transformation and digital officer since 2020; and Paula Dean Kranz, vice president of innovation enablement and executive director of the Novant Health Innovation Labs. 

14. Philadelphia-based Penn Medicine announced that it would eliminate administrative positions. The change is part of a reorganization plan to save the health system $40 million annually, the Philadelphia Business Journal reported March 13. Kevin Mahoney, CEO of the University of Pennsylvania Health System, told Penn Medicine’s 49,000 employees changes include the elimination of a “small number of administrative positions which no longer align with our key objectives,” according to the publication. 

15. Sovah Health, part of Brentwood, Tenn.-based Lifepoint Health, eliminated the COO positions at its Danville and Martinsville, Va., campuses. The responsibilities of both COO roles are now spread across members of the existing administrative team. 

16. Valley Health, a six-hospital health system based in Winchester, Va., eliminated 31 administrative positions. The job cuts are part of the consolidation of the organization’s leadership team and administrative roles. They were announced internally on Feb. 28. 

17. Roseville, Calif.-based Adventist Health announced it would transition from seven networks of care to five systemwide to reduce costs and strengthen operations. Under the reorganization, the health system will have separate networks for Northern California, Central California, Southern California, Oregon and Hawaii. The reorganization will result in job cuts, including reducing administration by more than $100 million.

OPPS Rule to Update Outpatient Payments, Hospital Price Transparency

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CMS proposes in the Outpatient Prospective Payment (OPPS) rule to increase Medicare outpatient payments by 2.8 percent next year while bolstering hospital price transparency enforcement.

The OPPS rule states that payment rates for hospitals that meet applicable quality reporting requirements will increase in 2024 based on the projected market basket percentage increase of 3.0 percent, less 0.2 percentage points for the productivity adjustment.

Meanwhile, ambulatory surgical centers (ASCs) would also see a 2.8 percent increase in payment rates next year under the proposed ASC rule that was released alongside the OPPS rule.

CMS also proposes to continue using the productivity-adjusted hospital market basket update to ASC payment system rates for another two years despite plans to shift away from the system as hospital procedures shift to ASC settings. But disruptions to care patterns during the COVID-19 pandemic have prompted CMS to extend the application of the hospital market basket update.

The OPPS and ASC proposed rules also include a new benefit category for Medicare beneficiaries who require more frequent services than individual outpatient therapy visits but less intensive services than a partial hospitalization program. The benefit would be the Intensive Outpatient Program and include its own payment and program requirements for services across various settings, including hospital outpatient departments, community mental health centers, and federally qualified health centers.

Starting next year, CMS also proposes establishing payment for intensive outpatient program services as part of Opioid Treatment Programs. These intensive behavioral health services are available for individuals with mental health conditions and substance use disorders.

Other payment policies proposed in the rule include an update to Medicare payment rates for partial hospitalization program services, remote mental health services, and OPPS and ASC dental services, as well as changes to community mental health center Conditions of Participation (CoPs). The proposed rule also contains updates to the 340B payment rate, which CMS proposed to remedy via previous rulemaking to return improper payments to eligible hospitals.

“This proposed rule reflects CMS’ commitment to ensure Medicare is comprehensive in its ability to address patient needs, filling gaps in the health care system including behavioral health,” Meena Seshamani, MD, Deputy Administrator and Director for CMS’ Center for Medicare, said in a statement. “Through these proposals, we will ensure people get timely access to quality care in their communities, leading to improved outcomes and better health.”

HOSPITAL PRICE TRANSPARENCY CHANGES ON HORIZON

In addition to payment updates, the OPPS proposed rule also includes extensive updates to hospital price transparency requirements to increase compliance and enforcement.

Previous OPPS rules have required hospitals to make standard charges, including payer-specific negotiated rates, available to the public in a machine-readable file on their websites and through a more patient-friendly list of shoppable services. Hospitals face financial penalties of up to $2 million if they do not comply with the requirements.

However, a recent website assessment conducted by CMS found that about 70 percent of hospitals were fully meeting display criteria for the machine-readable file, 27 percent were partially meeting display criteria, and just 3 percent failed to post any required pricing data online by the fall of 2022. The rates improved from a previous compliance assessment in early 2021 when 30 percent of hospitals did not publish the required pricing data.

However, the latest OPPS rule aims to increase compliance by altering enforcement actions. For example, the rule would allow CMS to require an authorized hospital official to certify the accuracy and completeness of the data in the machine-readable file. Hospitals may also have to submit additional documentation to determine hospital compliance and an acknowledgment of receipt of the warning notice if CMS deems them out of compliance.

If CMS has to take action to address noncompliance, CMS may also notify the hospital’s health system leadership of the issue and work with the health system to address compliance issues across its system.

Finally, CMS proposes to publicize a hospital’s assessment of compliance, any compliance actions taken against a hospital, and notifications sent to health system leadership.

Additionally, the OPPS rule would update hospital price transparency requirements, requiring hospitals to display the required pricing data using a CMS template versus any machine-readable file format. Pricing data would also have to be encoded in a CSV or JSON format using a CMS template layout and other specified technical instructions.

CMS aims to increase machine-readable file accessibility by proposing a requirement to place a “footer” at the bottom of a hospital’s homepage that links to the webpage with the pricing data. Hospitals would also have to ensure that a .txt file is included in the root folder of the publicly available website chosen by the hospital for posting its machine-readable format.

Healthcare stakeholders can comment on the OPPS and ASC proposed rules through September 11th. CMS expects to release the final rules in November.

Value-vased care battle: Kaiser-Geisinger vs. Amazon, CVS, Walmart

Posted on by • Posted in Amazon, Amazon Care, Competition, CVS Health, Disruption, Fee for Service Reimbursement, Geisinger Health, Health System, Hospital, Hospital Industry, Innovation, Innovative Care Models, Kaiser Permanente, Risant Health, Transformation, Transformation Strategy, Transformation Sustained, Transformational Change, Value-Based Healthcare, Walmart • Leave a comment

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For decades, research studies and news stories have concluded the American system is ineffective,

too expensive and falling further behind its international peers in important measures of performance: life expectancy, chronic-disease management and incidence of medical error.

As patients and healthcare professionals search for viable alternatives to the status quo, a recent mega-merger is raising new questions about the future of medicine.

In April,  Kaiser Permanente acquired Geisinger Health under the banner of newly formed Risant Health. With more than 185 years of combined care-delivery experience, Kaiser and Geisinger have long been held up as role models of the value-based care movement.

Eyeing the development, many speculated whether this deal will (a) ignite widespread healthcare transformation or (b) prove to be a desperate attempt at relevance (Kaiser) or survival (Geisinger).

Whether incumbents like Kaiser Permanente and Geisinger can lead a national healthcare transformation or are displaced by new entrants will depend largely on whether they can deliver value-based care on a national scale.

In Search Of Healthcare’s Holy Grail

Value-based care—the simultaneous provision of high quality, convenient and affordable medical care—has long been the aim of leading health systems like Kaiser, Geisinger, Mayo Clinic, Cleveland Clinic and dozens more.

But results to-date have often failed to match the vision.

The need for value-based care is urgent. That’s because U.S. health and economic problems are expected to get worse, not better, over the next decade. According to federal governmental actuaries, healthcare expenditures will rise from $4.2 trillion today to $7.2 trillion by 2031. At that time, these costs are predicted to consume an estimated 19.6% of the U.S. Gross Domestic Product.

Put simply: The U.S. will nearly double the cost of medical care without dramatically improving the health of the nation.

For decades, health policy experts have pointed out the inefficiencies in medical care delivery. Research has estimated that inappropriate tests and ineffective procedures account for more than 30% of all money spent on American medical care.

This combination of troubling economics and untapped opportunity explain why value-based care has become medicine’s holy grail. What’s uncertain is whether the transformation in healthcare delivery and financing will be led from inside or outside the healthcare system.

Where The Health-System Hopes Hang

For years, Kaiser Permanente has led the nation in clinical quality and patient outcomes based on independent, third-party research via the National Committee for Quality Assurance (NCQA) and Medicare Star ratings. Similarly, Geisinger was praised by President Obama for delivering high-quality care at a cost well below the national average.

And yet, these organizations, and many other highly regarded national and regional health systems, are extremely vulnerable to disruption, especially when their strategy and operational decisions fail to align.

Kaiser, for its part, has struggled with growth while Geisinger’s care-delivery strategy has proven unsuccessful in recent years. Failed expansion efforts forced KP to exit multiple U.S. markets, including New York, North Carolina, Kansas and Texas. More recently, several of its existing regions have failed to grow market share and weakened financially.

Meanwhile, Geisinger has fallen on hard times after decades of market domination. As Bob Herman reported in STAT News: “Failed acquisitions, antitrust scrutiny, leadership changes, growing competition from local players, and a pandemic that temporarily upended how patients got care have forced Geisinger to abandon its independence. The system is coming off a year in which it lost $240 million from its patient care and insurance operations.”

Putting the pieces together, I believe the Kaiser-Geisinger deal represents an industry undergoing massive change as health systems face intensifying pressure from insurers and a growing threat from retailers like Amazon, CVS and Walmart. This upcoming battle over the future of value-based care represents a classic conflict between incumbents and new entrants.

Can The World’s Largest Companies Disrupt U.S. Healthcare?

Retail giants, including Amazon, Walmart and CVS, are among the nation’s 10 largest companies based on annual revenue.

They have a broad geographic presence and strong relationships with almost all self-funded businesses. Nearly all have acquired the necessary healthcare pieces—including clinicians, home-health services, pharmacies, insurance arms and electronic medical record systems—to replace the current medical system.

And yet, while these companies expand into medical care and financing, their core businesses are struggling, resulting in announced store closures and layoffs. As newcomers to the healthcare market, they have been forced to pay premium dollars to acquire parts of the delivery system. All have a steep learning curve ahead of them.

The Challenge Of Healthcare Transformation

American medicine is a conglomerate of monopolies (insurers, hospitals, drug companies and private-equity-owned medical practices). Each works to maximize its own revenue and profit. All are unwilling to innovate in ways that benefit patients when doing so comes at the sacrifice of financial performance.

One problem stands at the center of America’s soaring healthcare costs: the way doctors, hospitals and drug companies are paid.

The dominant payment methodology in the United States, fee-for-service, rewards healthcare providers for charging higher prices and increasing the number (and complexity) of services offered—even when they provide no added value.

The message to doctors and hospitals is clear: The more you do, and the greater market control you have, the higher your income and profit. This is the antithesis of value-based care.

The alternative to fee-for-service payments, capitation, involves paying a single, up-front sum to the providers of care (doctors and hospitals) to cover the total annual cost for a population of patients. This model, unlike fee-for-service, rewards effectiveness and efficiency. Capitation creates incentives to prevent disease, reduce complications from chronic illness, and diminish the inefficiencies and redundancies present in care delivery. Capitated health systems that can prevent heart attacks, strokes and cancer better than others are more successful financially as a result. 

However, it’s harder than it sounds to translate what’s best for patients into everyday decisions and actions. It’s one thing to accept a capitated payment with the intent to implement value-based care. It’s another to put in place the complex operational improvements needed for success. Here are the roadblocks that Kaiser-Geisinger will face, followed by those the retail giants will encounter.

3 Challenges For Kaiser-Geisinger:

  1. Involving Clinical Experts. Kaiser Permanente is a two-part organization and when the insurance half (Kaiser) decided to acquire Geisinger, it did so without input or involvement from the half of the organization responsible for care-delivery (Permanente). This spells trouble for Geisinger, which must navigate a complex turnaround without the operational expertise or processes from Permanente that, in the past, helped Kaiser Permanente grow market share and lead the nation in clinical quality.
  2. Going All In. To meet the healthcare needs of most its patients, Geisinger relies on community doctors who are paid on a fee-for-service basis. Generally, the fee-for-service model is predicated on the assumption that higher quality and greater convenience require higher prices and increased costs. With Geisinger’s distributed model, it’ll be very difficult to deliver consistent, value-based care.
  3. Inspired Leadership. Major improvements in care delivery require skilled leadership with the authority to drive clinical change. In Kaiser Permanente, that comes through the medical group and its physician CEO. In Geisinger’s hybrid model, independent doctors have no direct oversight or central accountability structure. Although Risant Health could be an engine for value-based medical care, it’s more likely to serve the role of a “holding company,” capable of recommending operational improvements but incapable of driving meaningful change.

3 Challenges For The Retail Giants:

  • More Medical Offerings. Amazon, Walmart and CVS are successfully acquiring primary care (and associated telehealth) services. But competing with leading health systems will require a more wholistic, system-based approach to keep medical care affordable. This won’t be easy. To avoid ineffective, expensive specialty and hospital services, they will need to hire their own specialists to consult with their primary care doctors. And they will have to establish centers of excellence to provide heart surgery, cancer treatment, orthopedic care and more with industry-leading outcomes. But to meet the day-to-day and emergent needs of patients, they also will have to establish contracts with specialists and hospitals in every community they serve.  
  • Capitalizing On Capitation. Already, the retail giants have acquired organizations well-versed in delivering patient care through Medicare Advantage, a capitated alternative to traditional (fee-for-service) Medicare plans. It’s a good start. But the retailers must do more than dip a toe in value-based care models. They must find ways to gain sufficient experience with capitation and translate that success into value-based contracts with self-funded businesses, which insure tens of millions of patients.
  • Defining Leadership. Without an effective and proven clinical leadership structure, the retail giants will be no more effective than their mainstream competitors when it comes to implementing improvements and shifting the culture of medicine to one that is customer- and service-focused.

Be they incumbents or new entrants, every contender will hit a wall if they cling to today’s failing care delivery model. The secret ingredient, which most lack and all will need to embrace in the future, is system-ness.

For all of the hype surrounding value-based care, fragmentation and fee-for-service are far more common in American healthcare today than integration and capitation.

Part two of this article will focus on how these different organizations—one set inside and one set outside of medicine—can make the leap forward with system-ness. And, in the end, you’ll see who is most likely to emerge victorious.

Are Medicare Advantage plans changing specialist practice patterns? 

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A hospital CEO recently relayed a story about challenges in access and coverage for pulmonology services in their market. A key group of pulmonologists there had scaled back hospital coverage and stopped seeing outpatients entirely.

“We’re hearing that they are spending almost all of their time seeing patients in skilled nursing facilities (SNFs),” she shared. Shortly after, we heard from another health system that their cardiologists had started rounding frequently in long-term care sites. This seemed unusual, given that payment for specialist consults in SNFs and other long-term care facilities is meager—it’s hard enough to find hospitalists or rehabilitation physicians to provide coverage and round at these sites.

However, it struck us that both of these health systems were located in markets with a high penetration of Medicare Advantage (MA) plans, and we wonder whether MA plans have increased payment to specialists to motivate them to consult in skilled nursing settings?

It’s unclear if policies have changed, but it would make sense. If a cardiologist could evaluate a patient in a SNF and avert an ambulance ride and hospital admission, the MA plan would save money.

But if health plans chose to do this at scale, it could prompt a significant shift in how some doctors spend their time, while leaving access gaps in other settings. If you’re seeing similar changes in your market, we’d be interested in hearing more! 

Taking a historical view of hospital operating margins

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So far, 2023 is shaping up to be a slightly better year for hospital performance, but it comes on the heels of unprecedented financial difficulties for the sector.

In the graphic above, we evaluated nearly 30 years of historical data from Kaufman Hall and the American Hospital Association to provide a broader perspective on hospital operating margins over time. 2020 and 2022 have been the only years in which a majority of hospitals—53 percent—posted a negative operating margin. 

During the most comparable periods of recent economic hardship, the “dot-com bubble burst” of the late 1990s and the 2009 Great Recession, the share of hospitals with negative operating margins amounted to only 42 and 32 percent, respectively.

With this context, hospitals’ current financial distress is more severe than anything we’ve seen in the past three decades. 

Healthcare is clearly no longer recession-proof: a four percent operating margin—the level needed for health systems to not only sustain operations but also invest in growth—feels even more elusive as labor costs remain high, surgical care continues to shift to outpatient settings, the second half of the Baby-Boom generation ages into Medicare, and deep-pocketed competitors compete for profitable services.

Quantifying private equity’s takeover of physician practices

Posted on by • Posted in Antitrust, Federal Trade Commission (FTC), Health Policy, Health System, High Prices, Hospital, Hospital Industry, Market Consolidation, Market Power, Mergers & Acquisitions, Physician Acquisition, Physician Employment, Physician Practice Acquisition, Private Equity • Leave a comment

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A detailed report, published by a group of organizations including the American Antitrust Institute, provides one of the highest-quality examinations of the growth of private equity (PE)-backed physician practices, and the impact of this growth on market competition and healthcare prices.

From 2012 to 2021, the annual number of practice acquisitions by private equity groups increased six-fold, and the number of metropolitan areas in which a single PE-backed practice held over 30 percent market share rose to cover over one quarter of the country. (Check out figure 3B at the bottom of page 20 in the report to see if you live in one of those markets.)

The study also found an association between PE practice acquisitions and higher healthcare prices and per-patient expenditures. In highly concentrated markets, certain specialties, like gastroenterology, saw prices rise by as much as 18 percent.

The Gist: As the report highlights, one of the greatest barriers to assessing PE’s impact on physician practices is the lack of transparency around acquisitions and ownership structures. This analysis brings us closer to understanding the scope of the issue, and makes a strong case for regulatory and legislative intervention. 

Recent proposed changes to federal premerger disclosure requirements offer a good start, but many practice acquisitions are still too small to flag review, and slowing future acquisitions will do little to unwind the market concentration already emerging. 

PE is also not the sole actor contributing to healthcare consolidation, and proposed remedies may target the activities of payers and health systems considered anti-competitive as well.

Biden administration proposes rollback of short-term health plan expansion

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 Last Friday, the Department of Health and Human Services, the Treasury Department, and the Department of Labor jointly issued several proposed rules to shore up consumer healthcare protections, including reversal of a Trump administration policy that allowed consumers to enroll in short-term health plans, which were intended to serve as limited coverage options during transitional periods, for up to three years. Approximately 3M people were enrolled in these plans in 2019.

A new rule would limit consumer access to these plans to just three months, with an optional one-month extension, while also requiring payers to disclose clearly how their plans fall short of comprehensive health insurance. 

The Gist: In an expected move, the Biden administration continues its unwinding of the Trump-era policies it sees as undermining the Affordable Care Act’s (ACA’s) mission of guaranteeing robust, accessible insurance for all. 

Short-term plans, which were granted an exemption from the ACA requirement that health plans cover ten essential health benefits, have been found to discriminate against people with pre-existing conditions, revoke coverage for enrollees retroactively, and generate excess surprise bills due to their limited networks.